/ 1 March 2024

Decarbonising: SA v Indonesia

Daily Life In Samarinda Ahead Of Indonesia Gdp Figures
Just don’t do it: A barge transports coal (above) at the Mahakam River in Samarinda in Indonesia, and a forest is cleared for farming in the country’s North Kalimantan area. (Dimas Ardian/Bloomberg via Getty Images)

South Africa ranks as the worst polluter on the continent when it comes to carbon emissions. Our dependency on coal for energy is the primary reason for this. Coal ranks at about 80% of South Africa’s primary energy needs. Globally South Africa is the 14th-highest emitter. 

Indonesia is also a very high carbon emitter. This is due to a combination of factors, in part owing to the high growth in coal use since 2000. It ranks as the ninth-highest emitter globally.

Land use and deforestation are another reason for the high emissions in the country. Conservative estimates believe it makes up around 80% of Indonesia’s carbon emissions, mostly coming from deforestation and peatland megafires and, to a lesser extent, the burning of fossil fuels for energy. 

Coal use for electricity makes up the rest of its emissions. About 60% of the country’s electricity comes from coal. 

There is a clear need for both countries to lessen their reliance on coal. Both are embarking on just energy transitions with funding aid from international groups. 

Let’s take a look at how the just transition is shaping up in both countries. 

South Africa reached a landmark agreement at the United Nations Climate Change Conference COP 26 in 2021. France, Germany, the UK, US and EU agreed to channel $8.5 billion to support a just and equitable transition in South Africa. 

This has since increased to $11.596 billion (R220 billion) with additional commitments from countries such as Denmark and the Netherlands. In addition, the World Bank has given a R9 billion loan to decommission Komati coal power station in 2022.So far, the station has been decommissioned. The money from the World Bank is meant for: 

• The decommissioning of the Komati plant ($33.5 million — about R634 million); 

• Repurposing the project area with hybrid renewables — solar, wind, batteries and a synchronous condenser ($416 million); and

• Minimising the socio-economic effects of the plant closure and creating opportunities for workers and communities ($47.5 million).

In Indonesia, the UN says the just transition partnership includes an agreement to mobilise $20 billion in public and private financing. The deal was signed in November 2022 at the G20 Leaders’ Summit in Bali between the president of Indonesia and the International Partners Group led by the US and Japan. The goal is to use a mix of grants, concessional loans, market-rate loans, guarantees, and private investments.

There are reports that a plan on how the money will be used has been presented to the government but that has not been made public yet. 

The country aims to reach net zero — no carbon emissions — by 2050. To do this it must significantly lower carbon emissions by lowering coal use and ensure that renewable energy generation comprises at least 34% of all power generation by 2030, roughly doubling renewables. 

It must be acknowledged that South Africa has a very different set of circumstances. While it is important to decarbonise globally, South Africa has energy challenges. Saliem Fakir, executive director at the African Climate Foundation, says, “In form it [the just transition] is very similar. In substance it is very different. 

“Each country has its context. But, all the just energy transition partnership countries have to consider decarbonisation as a strategic goal to offset the potential trade implications of having too carbon-intense products. South Africa has both an energy security and carbon emissions problem. We are attempting to solve both. Indonesia is more of a carbon emissions challenge.”

The climate crisis is not something we can drag our feet on and emissions need to be reduced urgently. To do so, Fakir said the following needs to happen:  “The main aspects of the JETP need to be implemented: decommissioning of coal plants, rapidly building out transmission lines, and decentralising more and more power generation to cities, households and firms. 

“Crucially we must ensure we do not achieve net zero at the cost of more unemployment and poverty. But, to get there you need prudent leadership. We need a good state, mobilised society and ethical delivery of programmes.”

Fakir believes it is imperative to get communities “out of coal and gas hell as fast as we can”.

Indonesia's Coal Powered Industrial Boom Is Testing Its Green Ambitions
Indonesia is the world’s ninth-biggest carbon emitter. (Dimas Ardian/Bloomberg via Getty Images)

South Africa is probably the most advanced globally as far as just transitions go: its framework and plans are in place. The framework is the first step to ensure the transition happens equitably. 

The Presidential Climate Commission (PCC) was set up by President Cyril Ramaphosa to oversee and facilitate a just and equitable transition towards a low-emissions and climate-resilient economy. It told the M&G: “The just transition framework brings coordination and coherence to just transition planning in South Africa. The just transition framework sets out a shared vision for the just transition, principles to guide the transition, and policies and governance arrangements to give effect to the transition.

“As an immediate intervention, it is critical that citizens are equipped with skills, assets, and opportunities to participate in industries of the future, with particular attention on impacted groups, the poor, women, people with disabilities, and the youth. Those who will survive are those that adapt and poorer communities need the state to amass its might and for departments to work together to ensure a new set of skills to be able to deal with the future.”

The PCC was given its mandate by the government after COP 26 to make the just transition run efficiently. Its implementation plan looks at ”financing structures, timing of financial flows, and other implementation modalities, which address governance, accountability, results monitoring, and evaluation mechanisms to ensure the achievement of desired and impactful outcomes.”

The PCC also has a financial mechanism document that “highlights the crucial interventions needing finance, the types of capital required, and the available funding streams. The report also addresses the barriers to directing existing funds towards viable just transition projects and suggests systemic changes to meet these funding needs.”

It has identified that the current funding system has a major obstacle. “Current efforts are often fragmented and uncoordinated. This, exacerbated by various other barriers, poses a major challenge in efficiently mobilising and allocating finance for the just transition. In response, the report proposes the creation of a just transition financing mechanism.”

Both countries urgently need to lower carbon emissions. There are steps in place to do this, however, they are in different stages of the energy transition. It will be extremely difficult to reach net zero carbon emissions and achieve a just energy transition.